Monthly Archives: February 2007

Every so often it happens that a new brand comes and shakes the existing players in the market to become the dominant player. But every ones in a while it happens that a big company goes for brand extension and shake the things for the preexisting market leader. I would say that this is a more astonishing scenario than being shaken up by a new entrant (it might not sound right, but please read on…) Reason being, when a newbie comes up with a killer product (or service), its product starts gaining market share and crosses the chasm before the big players even notice it. In normal cases the preexisting companies are so highly engaged in their own products and existing competition, that they give the new company a free run till it becomes worth their efforts. So by the time this newbie comes on the radar of these companies (and it comes only if it gets successful), it has already become a considerable player in the market. But on the other hand, when a company with well established base in some other market goes for brand extension, every move it makes is placed under high scrutiny by the market leaders. So the case of a free run doesn’t exist here. You won’t expect anyone to take any successful brand less seriously even for a single day. But then too they go for brand extension and disrupts the preexisting market leaders. Well that’s elephants doing brand extension “correctly”.

So how does this happen? They must be doing brand extension correctly (and I think we discussed this in some good details in my previous posts, so a re-run is not required here). Along with that, a few other things, that these companies already own, are of great help. First of all, a strong brand identity. That’s something invaluable and can be of immense help for this company to sell it’s product in the new market. For example, consider General Electric. GE has a strong brand recognition, so no matter which market they go, it helps them a lot.

Second important thing, which is in some ways a requirement for brand extension by big companies, is monetary muscles. These companies have a lot of investment capacity in the new markets. So they can stand the price wars and competitive challenges with a comparative ease as compared to the new start-ups. For example, Microsoft launching Xbox. Thanks to the deep-pockets, Microsoft was able to fend-off the competition from Sony PlayStation 2 and go for a successful brand extension in the video game market.

Now let’s talk about a couple of things that are required for the company to be successful during and after brand extension. The company got to plan ahead and be innovative. This is like a requirement because existing market leaders are going to race ahead. The existing market leaders are not going to stay idle (like they might if it was a small start-up). They are going to double their efforts to make sure they have the edge over the new big players entering the market. So in order to have successful brand extension, the new entrant will have to not only match the products provided by existing market leaders, but out innovate them, both in quality and price.

Another very important point, and probably the most important one, is to maintain the market leadership in their existing market. This company cannot afford to go loose in the market where they have a leadership position. This is the channel through which it is fueling the capital that is required for brand extension. This is the market from where it has cultivated a strong brand identity. And of course, there are always other companies that are planning to do brand extension in this market. So who says Elephants can’t go for successful brand extensions? They absolutely can, and when they get it right, it’s brand extension at its best!

Entertainment in today’s World comes with an array of options. Hundreds of television channels, tens of radio channels, many newspapers and magazines, and zillions of websites on the Internet. This range of options is a blessing and a curse for the advertising World. Blessing, because it provides advertisers with options to target the right segment of customers. Every dollar spent on promoting a product can be spent with the right customer in mind. But on the other hand, it’s getting harder and harder to make the target audience wait and see the advertisements. That’s a big challenge which is going to increase every day. One thing that may increase the chances of people watching the ads is by blending them with the content of the medium.

Advertisers are paying special attention to make sure they are targeting the right segment of audience. Advanced software are developed to make sure the relevance and reach of advertisement maps to the target audience. This has increased the effectiveness of advertisement a lot. But merely placing the advertisement at the right spot does not guarantee a couple of things. First, the advertisement will be noticed, or even that it will be watched by the target audience. For mediums like television and radio, the customer might flip the channel and for mediums like newspaper and magazine, it might go unnoticed. Second, the appeal of advertisement on the audience at that particular moment. Let’s consider that the right audience notice the advertisement, but did this advertisement persuade the customer to buy the product (or service)? Studies suggest the chances to be less a percent on an average.

In order to address these issues, we should look at blend in advertising to make customers notice the advertisement and think about going for the product. So what do I mean by blend in advertising (I am sure I didn’t coin the phrase, but my definition might vary from others)? Blend in advertising means making the ad fit the customer’s thought process at time the advertisement appears. Think about an advertisement which appeals to the customer because it is meshed in with what they are doing or what is happening in their surrounding at that time. To make a blend in advertisement, it should be seasonal, i.e. mesh in well with the season the customer is experiencing day in and day out, it should be geo-targeted i.e. fall in lines with the region where the customer lives, it should be well versed with the time of the day the message is delivered and so on. The advertisement should also mix well with the content the customer is getting through the medium at that time. For example, on a rainy Saturday afternoon, watching a football game in the living room in a metro city, the customer will be more appealed by an advertisement which takes these pivots (rainy day, metro city, football game) into account to deliver the message. Similarly, listening to Mozart while driving home back from work on a pleasant evening, the advertisement is not an interruption if it makes sure it is along the same lines with what the customer is wanting to listen.

There are a few things that might go wrong when you are trying to deliver blend in advertising. As we can see, in order to blend in the advertisements, many variations of the advertisements need to be delivered to the customer. It is important to remember that they are just “variations” of the advertisement. The central message, the tagline and the feel of the advertisements should be the same. It is important that by delivering the blend in messages, the brand identity of the advertiser is not lost.

The concept of blend in advertisement can be applied to any medium to make the advertisement more effective. The basic principle is to keep the central message of the advertisement the same, but change the way the message is presented to the customers to help them connect to it instantly. Personalize the message for the audience and make them believe that this is the right product to get at this time. So when the right audience is targeted with the right content at the right time, it is no more a bugging advertisement, it is information your customers were waiting to get in order to make a buying decision.

Since writing the post about Evian bottled water a few months back (and spending generously to purchase bottled water during my recent trip to Europe), I have been following the bottled water industry more closely. This is one industry that fascinates me with its innovative marketing and advertising practices. If we take the bottled water industry as a whole, we got to think who are they competing against? The free flowing tap water? Yes, that’s correct. A tasteless, colorless, odorless liquid that sells for more than gasoline in any developed country is competing against something that is freely available. And that’s not all, many activist organizations taking their aims and trying to paint the industry a big fraud, keep FDA and the likes on high alert. So to let alone strive, I think even to survive in this business, you need to be extraordinarily creative.

Speaking of creativity (and assuming Evian is out of this World), let’s start with something that created controversy with its advertisements: “The Label Says Fiji Because It’s Not Bottled in Cleveland.” (ok, that was dumb, but it created a hell lot of buzz). Fiji Water that markets itself as affordable luxury sells about a 180 million bottles of water every year, all exported from the Fiji island. The company has made the isolated location of the Fiji island as an important selling point. Fiji Water has done great product placement by linking itself with exotic places and selling it to the elite consumers as a form of cultural capital. Today you can find a bottle of Fiji Water in your room in an upscale hotel, in hands of celebrities and on any news conference featuring the rich or the beautiful. What Fiji Water has successfully done is added a distinctive status to its water.

Fiji water claims that it has a naturally high level of silica which strengthen your hair, skin and nails. When a survey was conducted targeting a group of people who regularly bought Fiji water, they asserted this statement. But actually, as stated by some independent research labs, the silica in Fiji water is so less that it doesn’t have any effect on human body! This is just amazing. The marketing forces at Fiji Water justifies shipping water from Fiji islands and successfully sell it for double the price of any regular bottled water by making people believe what they are drinking is nutritious, which in fact is just plain water. This, combined with the status symbol, has made Fiji water one of the most successful bottled water companies in the World.

Then there are cola giants, beer companies and other FMCG brands trying to grab their share of the market. Coke’s theme for selling Dasani bottled water: “Treat Yourself Well. Every Day”, while Pepsi’s slogan for selling Aquafina: “Nothing but pure refreshment”. Both Coke and Pepsi were late to join the bottled water race following the Used Apple Policy, but due to their deep financial pockets and cheaper methods to produce bottled water (they accept that they are selling re-purified tap water), they are gaining considerable market share.

Bottled water is a Worldwide phenomenon. Companies in different parts of the World use different slogans to sell water. Bisleri in India sells water using “Play Safe” campaign, Kerry spring water’s slogan for selling water in Ireland is “Refreshes in every sense”, Korunni in Czech Republic says “Perfectly balance with no bubbies added”and Rocchetta in Italy base their advertisements on “Cleansed inside, beautiful outside”. If you just see these campaign slogans and not the bottled water, you might not even realize what these companies are trying to sell!

About seventy percent of earth is covered with water, sixty percent human body is water, most fruits and vegetables contain up to ninety percent water, while meats and cheeses contain at least fifty percent water. Still we pay lavishly to buy bottled water. There are about a fifty to hundred thousand water bottle labels in the World. It is about a $7 billion industry in US alone, making bottled water America’s second most popular beverage, just behind soda. The real question…are we really buying just water? Or to put it the other way, are they selling just water? No, absolutely not. Just water won’t sell. As I claimed before, it’s the faith, happiness and purity being sold in that bottle which contains a byproduct known as water!

Cult branding is the phenomenon of building a brand some people love, not a brand no one hates. If we talk about cult in general, we talk about an exclusive group with some particular beliefs and practices. These are the groups comprising of people who just love being part of it, and sometimes, or may be often times, are hated by the people outside of it. Based on the same concept, some companies started marketing their products to target a specific customer segment. When a company designs and markets its product with a very specific customer segment in mind, it ends up creating a social group, something like the cult. This group has customers who love and trust the brand, and have great loyalty towards it. Some famous companies that fall in this category are Apple, Harley Davidson, Ikea and Whole foods.

It totally makes sense when a company builds this cult brand and develops a group of loyal customers. The thing that fascinates me the most is how these cult brands every once in a while captures the mainstream market share. Some of them have become so much mainstream that we don’t even remember or notice that they were actually cult brands once upon a time.

So how do cult brands establish themselves in mainstream market? Here’s my take on it. A new product launched in any market by any company needs to reach a tipping point before it becomes mainstream. Initially, to start with, the company brands itself to gain attention of a certain demographic to which their product has the greatest appeal. These initial adopters of the product help the company, in terms of Geoffrey Moore, cross the chasm. They become the advocates of the product and ambassadors of the brand. This is where the marketing to the mainstream starts. The company broadens its target customer base to strike a broader segment. They get a lot of help from the cult members in this attempt. If the product has that mass appeal to the mainstream World, slowly the cult gets bigger and bigger and as the brand starts taking the mainstream position, the cult shapes itself as the mainstream market.

To support this argument with an example, I cannot think of a brand that explains it better than Apple Computers Inc. Apple has been historically a brand which was loved by a certain group of people who loved using the Apple branded computers with Mac operating systems on it. Apple came up with the same phenomenon of coupling up its proprietary hardware with software when it launched the Apple iPod. iPod worked only with Apple computers and was warmly received by the same people who loved the Apple computers. The cool look and feel of iPod soon started making buzz in the industry. After getting substantial product feedback and a loyal customer base, Apple launched the next version of iPod which could work on Windows powered computers as well. This was the first step Apple took to bring itself and the iPod product into the mainstream. The initial adopters of the brand helped Apple by making iPod a fashion symbol attracting more and more people towards it. Apple also launched iTunes that allowed people to download music one song at a time, revolutionizing the music industry. Next Apple came up with models of iPod to meet the requirement of an even bigger market, attracting everyone with an iPod for every budget. And the rest is all well known. Apple iPod holds more than 80% market share of the US hard drive-based music player market and iTunes has captured more that 70% share of all PC-based digital music download market. So a brand that started with a cult has now captured the mainstream market.

An important point to note here is that the iPod has a mass appeal. It is very important to notice this. Everything aside, a cult brand can only take on the mainstream competitors if it has that mass appeal. But if it does, it is better positioned than any other brand out there of the same strength to take on the mainstream market. Why? The answer is simple, and I think logical, its easier to convert a noticeable brand that some people love into a brand everyone loves as compared to a not noticeable brand that no one hates.